Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,800 units of Prime and 1,300 units of Luxuria in 2019.The following estimates are given for 2019:

Nantucket had an inventory of 240 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 230 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $13. There were 140 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019.
What is the total budgeted cost of goods manufactured in 2019?

Question

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,800 units of Prime and 1,300 units of Luxuria in 2019.The following estimates are given for 2019:

Nantucket had an inventory of 240 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 230 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $13. There were 140 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019.
What is the total budgeted cost of goods manufactured in 2019?

Quizplus · Accepted Answer

Budgeted cost of goods manufactured for Prime = [3,910 units (Estimated units to be manufactured) × $170 (Cost per unit)] = $664,700. Budgeted cost of goods manufactured for Luxuria = [1,405 units (Estimated units to be manufactured) × $390 (Cost per unit)] = $547,950. Total cost of goods sold = $664,700 + $547,950 = $1,212,650

Nantucket Industries Manufactures and Sells Two Models of Watches, Prime